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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the ____ day of _____________, 1997, by and between Xxxxx Foods Inc., a
Delaware corporation (the "Employer"), and X.X. XXXXXX (the "Executive").
RECITALS
A. The Employer desires that the Executive continue to provide
services for the benefit of the Employer and its affiliates and the Executive
desires to so continue such employment with the Employer.
B. The Employer and the Executive acknowledge that the Executive has
and will continue to be the leader of the senior management team of the
Employer.
C. In the course of employment with the Employer, the Executive will
have access to certain confidential information that relates to or will relate
to the business of the Employer and its affiliates.
D. The Employer desires that any such information not be disclosed to
other parties or otherwise used for unauthorized purposes.
NOW, THEREFORE, in consideration of the above premises and the
following mutual covenants and conditions, the parties agree as follows:
1. Employment: Director Matters. The Employer shall continue to
employ the Executive as President and Chief Executive Officer of Xxxxx Foods
Inc. and will cause its subsidiary, Xxxxx Meat Inc., to appoint Executive as
President and Chief Executive Officer of such subsidiary, and the Executive
hereby accepts such employment on the following terms and conditions. The
Executive shall be appointed and serve as a member of the Board of
Directors of the Employer. The Board of Directors will also nominate and elect
a designee of the Executive to the Board of Directors during the term of this
Agreement.
2. Duties. The Executive shall work for the Employer in a full-time
capacity. The Executive shall, during the term of this Agreement, have the
duties, responsibilities, powers and authority customarily associated with the
positions identified in Paragraph 1. The Executive shall report to, and follow
the direction of the Board of Directors. In addition to, or in lieu of, the
foregoing, the Executive shall also perform such other and unrelated services
and duties as may be assigned to him from time to time by the Board of
Directors. The Executive shall diligently, competently, and faithfully perform
all duties, and shall devote his entire business time, energy, attention, and
skill to the performance of duties for the Employer and will use his best
efforts to promote the interests of the Employer.
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3. EXECUTIVE LOYALTY. The Executive shall devote all of his time,
attention, knowledge, and skill solely and exclusively to the business and
interests of the Employer, and the Employer shall be entitled to all benefits
and profits arising from or incident to any and all work, services, and advice
of the Executive. The Executive expressly agrees that during the term of this
Agreement, he shall not engage, directly or indirectly, as a partner, officer,
director, stockholder, advisor, agent, employee, or in any other form or
capacity, in any other business similar to that of the Employer or its
affiliates. The foregoing notwithstanding, nothing herein contained shall be
deemed to prevent the Executive from investing his money in the capital stock or
other securities of any corporation whose stock or securities are publicly-owned
or are regularly traded on any public exchange, nor shall anything herein
contained be deemed to prevent the Executive from investing his money in real
estate.
4. TERM OF EMPLOYMENT. This Agreement shall be entered into for a period
of three (3) years, commencing ___________, 1997 and continuing through
___________, 2000 (the "Initial Term"). Beginning in __ 1998, the term of
employment shall be renewed daily for a period of two (2) years (a "Renewal
Term") so that the renewal term will always be two years, unless the Executive
provides the Board of Directors with written notice to the contrary at least
ninety (90) days prior to the termination of this Agreement.
5. COMPENSATION.
A. SALARY. The Employer shall pay the Executive an annual salary of
$250,000 (the "Initial Salary"), payable in substantially equal installments in
accordance with the Employer's payroll policy from time to time in effect. The
Executive's salary shall be subject to any payroll or other deductions as may be
required to be made pursuant to law, government order, or by agreement with, or
consent of, the Executive. Increases to the Initial Salary, as adjusted, shall
be made following an annual salary review, the first of which shall take place
in or around ___________, 1998, and all subsequent reviews shall occur in or
around ___________ of each year thereafter. The Initial Salary shall be
increased, effective _____________, 1998, and the Initial Salary, as previously
adjusted, shall be increased, effective on each anniversary of such date
occurring during any Renewal Term, by a percentage equal to the percentage
increase, if any, in the Consumer Price Index for all Urban Consumers - new
Series (1982-1984 = 100) for the Chicago Metropolitan Area, as published by the
U.S. Bureau of Labor Statistics, over the 12-month period ended on the
immediately preceding December 31st. The Executive's annual salary may also be
further increased, at the discretion of the Board of Directors, following annual
salary reviews which shall occur on or about ___________, 1998 and each
anniversary of such date occurring during any Renewal Term.
B. BONUSES. The Employer shall pay the Executive a quarterly performance
bonus equal to 5% of Employer's quarterly profit before taxes, payable ______
days after the end of each quarter. The Executive's bonus shall be subject to
any payroll or other deductions as may be required to be made pursuant to law,
government order, or
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by agreement with, or the consent of, the Executive. The Executive may receive
additional bonuses as awarded in the discretion of the Board of Directors of
the Employer.
C. Right to Receive Equity. Upon the completion of the
contemplated restructuring, the Employer shall grant 238,000 fully-vested shares
of stock to the Executive. The Employer shall provide a loan as described in
Paragraph 7 to the Executive to assist with the tax consequences of the grant of
such stock. The Executive shall be eligible to receive stock option grants
consistent with those grants made to other executives in 1998 and subsequent
years. Any options granted will fully vest upon a change in control of the
Employer.
D. Other Benefits. During the term of this Agreement, the Employer
shall provide the Executive with all perquisites and fringe benefits on terms no
less favorable than those provided to the Executive prior to the date hereof. If
the perquisites and fringe benefits are more favorable than those heretofore
provided, then the perquisites and fringe benefits must be no less favorable
than those provided to other employees of Employer. These perquisites and fringe
benefits ("Benefits") include, but are not limited to:
(1) any life insurance, disability insurance, medical, dental
or health care insurance, pension and retirement plans and other benefit
plans or programs (including, if applicable, any excess benefit or
supplemental executive retirement plans) maintained by the Employer for the
benefit of its executives;
(2) no less than four (4) weeks paid vacation per annum;
(3) reimbursement for all reasonable and approved expenses
related to relocation from Tampa, Florida to Chicago, Illinois, including
but not limited to, continued reimbursement for rental costs associated
with any interim residence in Chicago, Illinois;
(4) an automobile allowance of $550 per month.
6. Expenses. The Employer shall reimburse the Executive for all
reasonable and approved expenses, provided the Executive submits paid receipts
or other documentation acceptable to the Employer and as required by the
Internal Revenue Service to qualify as ordinary and necessary business expenses
under the Internal Revenue Code of 1986, as amended (the "Code").
7. Loans. At the time of the grant of 238,000 shares of stock
described in Paragraph 5, the Employer shall loan to the Executive $__________
for three years with interest at the Applicable Federal Rate as provided by the
Internal Revenue Service under Paragraph 1274(d) of the Code in the most recent
announcement preceding such loan and the Executive shall deliver to the
Employer a note for such loan in the form of Exhibit A. Fifty percent (50%) of
the principal of and all accrued interest on such note shall be
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forgiven on the first anniversary of such loan and twenty-five percent (25%) of
the principal of and all accrued interest on such note shall be forgiven on the
second and third anniversaries of such loan, provided that the Executive shall
not be entitled to loan forgiveness on any anniversary date if he has terminated
his employment under Paragraph 8D on or prior to such anniversary date.
8. Termination. The Executive's services shall terminate upon the first to
occur of the following events:
A. Upon the Executive's date of death or the date the Executive is
given written notice that he has been determined to be "disabled" by the
Employer. For purposes of this Agreement, the Executive shall be deemed to be
"disabled" if the Executive, as a result of illness or incapacity, shall be
unable to perform substantially his required duties for a period of six (6)
consecutive months or for any aggregate period of six (6) months in any twelve
(12) month period.
B. On the date the Employer provides the Executive with written notice
that he is being terminated for "cause". For purposes of this Agreement, the
Executive shall be deemed terminated for "cause" if the Employer terminates the
Executive after the Executive:
(1) shall be convicted of any felony including, but not limited to,
a felony involving fraud, theft, misappropriation, dishonesty, or
embezzlement of the Employer's property; or
(2) shall have committed intentional acts that materially impair
the goodwill or business of the Employer; or
(3) shall have refused to, or willfully failed to, perform his
material duties hereunder.
C. On the date the Executive terminates his employment for "Good
Reason". For purposes of this Agreement, the Executive shall be deemed to
terminate his employment relationship for "Good Reason" if the Executive
terminates his employment after the Employer:
(1) fails to pay or provide the Executive's required compensation;
or
(2) fails to maintain the Executive's title, positions and/or
duties.
D. On the date the Executive terminates his employment for any reason
other than for "Good Reason", provided that the Executive shall give the
Employer ninety (90) days written notice prior to such date of his intention to
terminate this Agreement.
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E. On the date the Employer terminates the Executive's employment during
the term hereof for any reason other than for "cause".
9. Benefits Upon Termination. If the Executive's services are terminated
pursuant to Xxxxxxxxxx 0X, 0X or 8E or if the Executive resigns within the
one-year period beginning upon a change of control of the Employer, the
Executive shall be entitled to receive (a) a lump sum payment of two times the
sum of the Executive's annual salary and most recent 12 months' bonus payments;
(b) all quarterly performance bonuses due through the end of the fiscal year of
termination; (c) any Benefits accrued to the date of termination but previously
unpaid; (d) the continuation of Benefits for the Executive and his dependents
for two years after the date of termination, except that medical insurance
coverage will be secondary upon the earlier of (i) the date on which the
Executive begins to be covered by comparable medical insurance provided by a new
employer or (ii) the earliest date on which the Executive becomes eligible for
Medicare or a comparable governmental insurance program; (e) full vesting of
options with all options remaining exercisable through the end of their original
terms; and (f) forgiveness of any remaining balance on the loan described in
Paragraph 7. In any event, the Executive shall also be entitled to any benefits
mandated under the Consolidated Omnibus Budget Reconciliation Act of 1985 or
required under the terms of any death, insurance, or retirement plan, program,
or agreement provided by the Employer and to which the Executive is a party, or
in which the Executive is a participant, including, but not limited to, any
short-term or long-term disability plan or program, if applicable.
10. No Duty to Mitigate. After a termination of employment, the Executive
will not be obligated to mitigate damages by seeking other comparable
employment.
11. Gross-Up Payment for Golden Parachute Taxes. If it is determined that
any payment by the Employer to or for the benefit of Executive, under this
Employment Agreement or otherwise, would be subject to the federal excise taxes
imposed under Section 280G and 4999 of the Code (the "Initial Excise Tax"), the
Employer will make an additional payment to the Executive (the "Gross-Up
Payment") in an amount such that after payment by Executive of all taxes,
including, without limitation, any income taxes and the excise tax, imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Initial Excise Tax. For purposes of this Paragraph 12, all
references to "taxes" shall include any interest or penalties imposed with
respect to such taxes.
12. Protective Covenants. The Executive acknowledges and agrees that the
services to be rendered by him to the Employer are of extraordinary merit and
constitute a necessary and valuable contribution to the general growth and
development of the Employer that results from the Executive's unique personal
talent and expertise. In return for the consideration described in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as a condition precedent to
the Employer entering into this Agreement, and as an inducement to the Employer
to do so, the Executive hereby represents, warrants, and covenants as follows:
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A. The Executive has executed and delivered this Agreement as his free and
voluntary act, after having determined that the provisions contained herein are
of a material benefit to him, and that the duties and obligations imposed on
him hereunder are fair and reasonable and will not prevent him from earning a
livelihood following the termination of his employment with the Employer;
B. The Executive has read and fully understands the terms and conditions
set forth herein, has had time to reflect on and consider the benefits and
consequences of entering into this Agreement, acknowledges that any reference in
this Paragraph 12 to the Employer applies also to any affiliates of the
Employer, and has had the opportunity to review the terms hereof with an
attorney or other representative, if he so chooses.
C. The execution and delivery of this Agreement by the Executive does not
conflict with, or result in a breach of or constitute a default under, any
agreement or contract, whether oral or written, to which the Executive is a
party or by which the Executive may be bound;
D. The Executive agrees that, during the time of his employment and for a
period of one (1) year after the termination of the Executive's employment
hereunder for any reason whatsoever or for no reason, whether voluntary or
involuntary, the Executive will not, except on behalf of Employer:
(1) directly or indirectly contact, solicit or direct any person, firm,
or corporation to contact or solicit any of the Employer's customers,
prospective customers, or business brokers (as hereinafter defined) for the
purpose of selling or attempting to sell any products and/or services that
are the same as or similar to the products and services provided by the
Employer to its customers during the term hereof. In addition, the
Executive will not disclose the identity of any such business brokers,
customers, or prospective customers, or any part thereof, to any person,
firm, corporation, association, or other entity, for any reason or purpose
whatsoever; and
(2) directly or indirectly, whether as an investor, lender, owner,
stockholder, officer, director, consultant, employee, agent, salesperson or
in any other capacity, whether part-time or full-time, engage in any
business involved in meat processing, or in the marketing or servicing of
products thereof. The Executive agrees that the scope described above is
necessary and reasonable in order to protect the Employer in the conduct of
its business; and
(3) solicit or accept if offered to him, with or without solicitation on
his own behalf or on behalf of any other person, the services of any person
who is an employee of the Employer, nor solicit any of the Employer's
employees to terminate employment with the Employer.
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E. The Executive agrees that both during his employment and thereafter,
the Executive will not, for any reason whatsoever, whether voluntary or
involuntary, use for himself or disclose to any person not employed by the
Employer any "Confidential Information" of the Employer acquired by the
Executive during his relationship with the Employer, both prior to and during
the term of this Agreement. The Executive further agrees to use Confidential
Information solely for the purpose of performing duties with the Employer and
further agrees not to use Confidential Information for his own private use or
commercial purposes or in any way detrimental to the Employer. "Confidential
Information" includes but is not limited to: (a) any financial, business,
planning, operations, services, potential services, products, potential
products, technical information and/or know-how, formulas, production,
purchasing, marketing, sales, personnel, customer, broker, supplier, or other
information of the Employer; (b) any papers, data, records, processes, methods,
techniques, systems, models, samples, devices, equipment, compilations,
invoices, customer lists, or documents of the Employer in confidence or subject
to other use or disclosure restrictions or Limitations; and (c) any other
information, written, oral, or electronic, whether existing now or at some time
in the future, whether pertaining to current or future developments, and whether
previously accessed during the Executive's tenure with the Employer or to be
accessed during this future employment with the Employer, which pertains to the
Employer's affairs or interests or with whom or how the Employer does business.
The Employer acknowledges and agrees that Confidential Information does not
include information properly in the public domain, or information in the
Executive's possession prior to the date of his original employment with the
Employer.
F. During and after the term of employment hereunder, the Executive will
not remove from the Employer's premises any documents, records, files,
notebooks, correspondence, computer printouts, computer programs, computer
software, price lists, microfilm, or other similar documents containing
Confidential Information including copies thereof, whether prepared by him or
others, except as his duty shall require, and in such cases, will promptly
return such items to the Employer. Upon termination of his employment with the
Employer, such items including summaries or copies thereof, then in the
Executive's possession, shall be returned to the Employer immediately;
G. For purposes of this Paragraph 12, "customer" shall be defined as any
person, firm, or any entity that purchases any time of product and/or service
from the Employer or is or was doing business with the Employer or the Executive
within the thirty-six (36) month period immediately preceding termination of the
Executive's employment. For purposes of this Paragraph 12, "prospective
customer" shall be defined as any person, firm, or entity contacted or solicited
by the Employer or the Executive (whether directly or indirectly) or who
contacted the Employer or the Executive (whether directly or indirectly) within
the twelve (12) month period immediately preceding termination of the
Executive's employment for the purpose of having such persons, firms, or
entities become a customer of the Employer. For purposes of this Paragraph 12,
"business broker" shall be defined as any person, firm or entity who is or was
doing business with the Employer or the Executive or who was contacted or
solicited by the Employer or the Executive (whether directly or
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indirectly) or who contacted or solicited the Employer or the Executive
(whether directly or indirectly) within the thirty-six (36) month period
immediately preceding termination of the Executive's employment; and
H. It is agreed that any breach or anticipated or threatened
breach of any of the Executive's covenants contained in this Paragraph 12 will
result in irreparable harm and continuing damages to the Employer and its
business and that the Employer's remedy at law for any such breach or
anticipated or threatened breach will be inadequate and, accordingly, in
addition to any and all other remedies that may be available to the Employer
at law or in equity in such event, any court of competent jurisdiction may
issue a decree of specified performance or issue a temporary and permanent
injunction, without posting bond or furnishing other security and without
proving special damages or irreparable injury, enjoining and restricting the
breach, or threatened breach, of any such covenant, including, but not limited
to, any injunction restraining the breaching party from disclosing, in whole
or part, any Confidential Information. The Executive will pay all of the
Employer's costs and expenses, including reasonable attorneys' and accountants'
fees, incurred in enforcing such covenants.
13. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a)
personally delivered, or sent by first class, registered, or certified mail,
postage prepaid, return receipt requested or by recognized overnight courier,
(b) send by telefacsimile, provided a hard copy is mailed on that date to the
party for whom such notices are intended; or (c) sent by other means at least
as fast and reliable as first class mail. A written notice shall be deemed to
have been given to the recipient party on the earliest of (a) the date it shall
be delivered to the address required by this Agreement; (b) the date delivery
shall have been refused at the address required by this Agreement; (c) with
respect to notices sent by mail or overnight courier, the date as of which the
postal service or overnight courier, as the case may be, shall have indicated
such notice to be undeliverable at the address required by this Agreement; or
(d) with respect to a telefacsimile, the date on which the telefacsimile is
sent and receipt of which is confirmed. Any and all notices referred to in
this Agreement, or which either party desires to give to the other, shall be
addressed to his residence in the case of the Executive, or to its principal
office in the case of the Employer.
14. Waiver of Breach. A waiver by the Employer of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
15. Assignment. The Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under
this Agreement. The rights and obligations of the Employer under this
Agreement inure to the benefit of and shall be binding upon the successors and
assigns of the Employer. Any successor to all or
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substantially all of the business and/or assets of the Employer must expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Employer would be required to perform if no such succession had
taken place.
16. Entire Agreement. This Agreement sets forth the entire and final
agreement and understanding of the parties and contains all of the agreements
made between the parties with respect to the subject matter hereof. This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto, with respect to the subject matter hereof. No
change or modification of this Agreement shall be valid unless in writing and
signed by the Employer and the Executive. If any provision of this Agreement
shall be found invalid or unenforceable for any reason, in whole or in part,
then such provision shall be deemed modified, restricted, or reformulated to
the extent and in the manner necessary to render the same valid and
enforceable, or shall be deemed excised from this Agreement, as the case may
require, and this Agreement shall be construed and enforced to the maximum
extent permitted by law, as if such provision had been originally incorporated
herein as so modified, restricted, or reformulated or as if such provision had
not been originally incorporated herein, as the case may be. The parties
further agree to seek a lawful substitute for any provision found to be
unlawful.
17. Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
hereof.
18. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.
19. Recitals. The recitals to this Agreement are an integral part
hereof and shall be considered as substantive and not precatory language.
20. Arbitration. Any controversy or claim arising out of or relating
to this Agreement or breach thereof, other than any controversy or claim
arising under Paragraph 9, shall be settled by arbitration in accordance with
the Voluntary Labor Arbitration Rules of the American Arbitration Association,
and judgement upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof in the State of Illinois. In reaching his or
her decision, the arbitrator shall have no authority (a) to interpret or
enforce Paragraph 9 of the Agreement (for which Paragraph 18 shall provide the
exclusive venue), (b) to change or modify any provision of this Agreement, or
(c) to base any part of his or her decision on the common law principle of
constructive termination. The prevailing party shall be entitled to an award of
reasonable attorneys' fees, and the parties may petition the arbitrator for
pre- and post-judgement interest to be included in the award.
21. Governing Law. This Agreement shall be governed by the laws of
the State of Illinois, without reference to its conflict of law provisions, and
any court action commenced herein shall have as its venue the County of Xxxx,
Illinois.
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IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
XXXXX FOODS INC.
By:______________________________ By:______________________________
P. Xxxxxx Xxxxxx Authorized Officer
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